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Poland’s high-income economy is the 23rd largest in the world in terms of nominal gross domestic product, as classified by the World Bank. Within the European Union (EU), Poland is the 8th largest economy, making it the largest among the former Eastern Bloc members of the EU. After the economic growth of the 1980’s, Polish officials decided to pursue a policy of economic liberalization. This decision directly gave the Polish economy the strength to withstand the global economic recession of 2007-2008, and as such, the Polish economy was the only one in the EU to avoid a recession. All aspects considered, the Polish economy has been growing steadily for the past quarter century, a record high in the European Union. Such growth has been exponential, with gross domestic product per capita growing on an average of 6% annually, the most impressive performance in Central Europe, which resulted in the doubling of Poland’s GDP since 1990.
Poland’s liberal monetary policy has become increasingly “foreigner friendly” in recent years. This policy has earned Poland the 24th highest Ease of Doing Business ranking (DB). Domestic and foreign businesses alike have boosted Poland’s economy by fortifying its service sector, along with its industrial and agricultural sectors. With this boost, Poland exported some $200 billion US dollars’ worth of goods to various trading partners around the world, particularly priding itself on its machinery, electronic equipment, plastic, furniture, and vehicle manufacturing. This article will cover the financial system of Poland, as well as a range of market information covering currency, futures, and stocks.
show moreKnown as the Warsaw Stock Exchange (WSE), Poland’s indigenous stock exchange is known as Giełda Papierów Wartościowych w Warszawie in Polish. This exchange boasts a market capitalization of some $365 billion USD. As a joint stock company, the Warsaw based exchange is a member of the Sustainable Stock Exchanges initiative (SSE) and also the Federation of European Securities Exchanges. It is worth noting that the Polish State Treasury owns a 35% stake in the exchange.
Since the beginning, the WSE has permitted electronic trading via its proprietary trading platform known as WARSET. Due to the advanced nature of the exchange, it should come as no surprise that the most sophisticated financial instruments such as derivatives, bonds, allotments, and subscription rights are common place on the exchange. Using these instruments, the WSE operates both the commodity and financial market. The commodity market trades in electricity, among other commodities, and is the most liquid of its kind in Europe. The financial market facilitates the trading of equities, derivatives, and other common trading instruments such as the fixed incomes of its pension system.
Poland’s official currency, the Polish złoty (PLN), is one of the stronger currencies in Eastern Europe. Sparking ongoing debate, the Polish złoty has yet to adopt the euro as its official currency unlike many members of the Eurozone.
The Polish central bank known as the Narodowy Bank Polski (NBP) issues and maintains the value of the złoty. In addition to circulating banknotes, the NBP also mints coins for both general circulation and coin collectors. The regulations stipulating the release of coins and notes are laid out in the Monitor Polski, a publication of Poland’s prime minister. Like most central banks, the NBP also bears responsibility for maintaining price stability while also holding inflation and thereby has maintained growth to a target rate of 2.5%.
The effect of the central bank’s achievement in such steady growth has been felt in the global foreign exchange market, giving the złoty one of the more popular rankings among exotic crosses. The most common pairings for the Polish złotyin currency trades tend to be the U.S. dollar (USD), the euro (EUR), along with the Swiss franc (CHF), the British pound (GBP) and the Australian dollar (AUD).
The złoty, also written as zł or PLN, is the masculine form of the Polish descriptor ‘golden’. Like most decimalized currencies, the złoty can be further subdivided into 100 cents or groszy, which is pluralized as grosze in native Polish. Like most European currencies, the złoty has undergone some changes in recent history, most notably the złoty’s redenomination in which every 10,000 old złotych became a single new złoty. After the adjustment, the złoty has seen increasing stabilization where the equivalent value has slightly fluctuated between a value of roughly 3-4 American dollars.
Since Poland decided to join the European Union in 2004, the country has expressed its desire to eventually adopt the euro as its own currency. While the country still has not published a timeline for this conversion, unpopular public sentiment along with skeptical political interest indicate that such a move is not likely to happen in the near future. However, Poland has definitely met the financial criteria for this move to happen, according to World Bank data. Poland’s annual inflation is around 0.4% and its gross domestic product goals are also on target at just under 3%.
